Life of Jamaica Limited (LoJ) and its subsidiaries showed strong balance sheet and earnings growth in 2004.
This was stated by Richard Byles, President and CEO, LoJ and J. Arthur Bethell, Chairman of LoJ in a report to LOJ's stockholders released last week.
In the first full financial year after the merger of LOJ and Island Life Insurance Company Limited (Island Life), the economic benefits resulting from the synergies of the merger were clearly manifested, they stated.
The operating results were also positively influenced by the significant new business generated by our sales teams. These results, in combination with the more favourable stock market environment, produced a dramatic increase in the stockholders' equity and the company's market capitalisation.
doubling of the rates
The 2004 net profit of $1.43 billion was 18 per cent better than the $1.21 billion figure for 2003, despite a doubling of the rates of Premium and Investment taxes. This represented a 28 per cent return on average equity. Basic earnings per share (EPS) was 57 cents as against 53 cents for 2003, a 7.5% increase. The weighted average numbers of shares in issue in 2003 was 2,273,847,287 compared to 2004's figure of 2,539,423,463 and reflects the fact that a substantial block of additional shares were issued for only nine months in 2003, for the Island Life business. On a fully diluted basis, the figures were $0.56 for 2004 and $0.52 for 2003.
The earnings were generated from total revenues of $7.1 billion and were driven principally by new business in the
individual life and employee benefits divisions, containment of operating expenses, actuarial gains from a number of internal operating efficiencies and realised capital gains of $358 million.
Total assets of the LOJ Group increased by 26.1 per cent to reach $20.6 billion, while total assets under management (including the LoJ Pooled Investment Funds and the Diversified Investment Funds) were $47.1 billion and showed a 29.4 per cent growth for the year. The return on invested assets was 15 per cent. Stockholders' equity stood at $6.4 billion at the year-end, an uplift of 68.4 per cent over the previous year.
The balance sheet growth was created mostly from increased business activity, the strong earnings performance and significant capital appreciation of our investment securities. An amount of $1.5 billion, in unrealised gains on "available-for-sale" securities, is being held in stockholders' equity on the Balance Sheet.
Market capitalisation at the year end was $28.7 billion as compared to $9.8 billion as at the end of 2003, an upswing of 193 per cent. This jump in value was a result of the LoJ share price climbing by almost three fold during the year. At December 31, 2003, the price per share was $3.90.
By December 31, 2004, the price had reached $11.30. Additionally, a total of 22,800,000 shares were issued during the year taking the issued capital to 2,543,690,130 shares. These shares were issued to staff as part of the employee share purchase plan.
premium income
LoJ was the industry leader in the production of new Individual Life business during 2004. New annualised premium income
of $825 million was settled, approximately 34 per cent of the market. Production in 2004 significantly exceeded the target of $610 million and last year's actual of $547 million. This production came with a conservation rate of 89 per cent.
The employee benefits division also produced significant new business during 2004. The division wrote $710 million of new annualised premiums eclipsing the target of $450 million and the 2003 record of $385 million. In producing these sales, the employee benefits division achieved a conservation rate of 98 per cent.
Excellent investment yields were generated for our clients by the segregated policy funds, the diversified investment fund and the pension funds being managed under trust through the subsidiary, LoJ Pooled Investment Funds Limited (LoJ PIF). These yields ranged from 8.6 per cent in the segregated foreign
currency fund to 111.5 per cent in the PIF Equity Fund.
An interim dividend of $0.10 per share or $254.4 million, for the 2004 financial year, was paid to shareholders during November 2004.
Subsequent to the year-end the board of directors declared a further dividend of $0.10 per share resulting from the company's strong performance. The market price increase along with the dividend paid represented a significant total return on investment for LoJ shareholders.
The company deepened its investment in financial services by acquiring a 51 per cent interest in the Pan Caribbean Financial Services Group during January 2005. The acquisition of First Life Insurance Company's insurance business is also expected to be concluded very shortly.
